Banque de France Bulletin no. 237: Article 6 The increase in non residents’ real estate investments is driven by expatriates

By Morel Roxane, Uri Julien

Thematic: Economy and international financing

Share links

At the end of 2019, non residents owned 1.5% of residential real estate in France, up from 1% in 2001. The value of their real estate assets amounted to EUR 125 billion, four times more than in the early 2000s. Half of this increase can be explained by the growth in the amount of surface area owned, and half by the rise in prices. 42% of non residents who hold residential real estate assets were born in France and are therefore most likely expatriates. Younger than ten years ago, they have accounted for nearly 60% of the growth in these investments over the past decade. This development contributes to the diversification of the origin and location of non residents’ real estate investments. In Paris, non residents own properties primarily in touristic or affluent neighbourhoods. For similar housing characteristics, non residents conduct real estate transactions at prices that are not very different from those of residents.

1 Non residents own an increasing amount of residential real estate in France

Non residents’ stocks of real estate direct investment have increased fourfold since the early 2000s

Non residents held EUR 125 billion of residential real estate assets in France at the end of 2019, four and a half times more than at the end of 2001 (see Chart 1 and Box 1). Over this period, stocks posted an average annual increase of 9%, with three phases of rapid growth (2001 2007, 2009 2011, 2015 2019) and two phases of stagnation or even slight decline (2008 2009, 2012 2014). The years 2001 2007 were marked by strong growth, averaging 18% per year, while, since 2014, stocks have grown at a more moderate pace (by 5% on average per year). At the end of 2019, real estate investment accounted for about one sixth (16%) of the total stock of foreign direct investment in France, a share that has been broadly stable since 2004.

For a better understanding of developments, it is necessary to breakdown the increase in real estate direct investment stocks into volume growth and price increases (see Box 2).

The fourfold increase in real estate direct investment stocks between 2001 and 2019 can be explained as much by the growth in surface area owned by non residents as by the rise in real estate prices in France, with these components doubling over the period. More specifically, the amount of surface area owned by non residents increased gradually over the period, with the volume effect raising stocks by EUR 2 to 5 billion each year.

At the same time, the price effect is much more variable, ranging from +EUR 7 billion in 2005 to almost –EUR 3 billion in 2009. Thus, while the growth in surface area accounts for just over half (53%) of the increase in real estate stocks between 2001 and 2019, the price effect determines most of the fluctuations in its growth rate (see Chart 2). The “cross effect” is negligible over the period.

Non residents own 1.5% of the residential real estate in France

At the end of 2019, non residents directly owned just over 1.5% of the residential surface area in France (see Chart 3). This corresponds to nearly 560,000 dwellings, for a total floor space of about 45 million m². Apart from a slight decline in 2019, the share held by non residents has been rising steadily since 2001, when it was less than 1% and represented just under 23 million m². …